SAP's Business ByDesign .... Redesign

SAP launched their hosted-application, Business ByDesign in late 2007 with much fanfare. SAP positioned the solution as a complete on-demand enterprise resource planning (ERP) suite for the mid-market that includes software for financials, human resources, supply chain management, business analytics and compliance management.

Unfortunately over the past couple of years Business ByDesgin has been plagued by some really bad press:

SAP gave an update a couple of days ago at a London event. Some of the problems Business ByDesign is dealing with include:

Scalability issues - all customers run on their own blade servers

Overly "feature-rich" - the suite was originally designed to meet all of the needs of its customer base instead of focusing on specific functionality

Lack of corporate commitment - SAP is cutting R&D funding and shifting resources to other products

Runs on NetWeaver - a full instance is too heavy for a SaaS application and finding "cloud developers" who have full Java EE stack experience may be tough

I worked at an SAP consulting company in the last 4-5 years of the dotcom era. At that time, SAP was pounded for not exposing core functionality via web services thus maintaining a silo of corporate data. In a couple of years SAP turn that giant freighter around and exposed almost everything via NetWeaver. SAP is a 1000 lbs gorilla but when it decides to do something, it may take awhile, but it becomes a force to be reckoned with.

However, 1-2 years in internet-time is forever. New markets may come and go in that time frame. SAP needs to become more agile if it wants to compete in the cloud space. SAP bought Coghead earlier this year but there seems to be no mention of how its technology is being utilized.

Can SAP pull off "cloud computing"? How does a company that has thrived for so long on an on-premise, high-margin, maintenance-fee model, move customers to a hosted, low-cost, user-licensed model without going bankrupt? I'd hate to be the marketing team in Waldorf.